BlackBuck Receives Buy Rating as Ambit Predicts Strong Growth Ahead, Values Stock at Rs 885
Ambit Capital has begun coverage on Zinka Logistics, the parent company of BlackBuck, assigning it a Buy rating with a target price of Rs 885. Notably, BlackBuck has established itself as India’s largest commercial vehicle technology platform by significantly enhancing its tolling and telematics services and achieving improved profitability over the past three years.
– Current Stock Price: Rs 699
– Market Leadership: BlackBuck serves over 7.9 lakh monthly transacting truck operators, which is approximately 23% of India’s trucker base.
Ambit’s report highlights the company’s exceptional growth trajectory:
– Revenue Growth: 53% CAGR is expected in the core business between FY22 and FY25.
– EBITDA Margin Improvement: Adjusted EBITDA margins are projected to rise from a loss of 121% in FY22 to a positive 24.2% by FY25.
The Road Freight Market Opportunity
The road freight sector is valued at $170-175 billion, constituting one of the most significant operating costs for Indian enterprises. BlackBuck’s FASTag-based tolling solution has rapidly gained traction, increasing its market share to nearly 50% of commercial vehicle tolling by 2QFY26, up from 22% in FY22.
Services offered by BlackBuck include:
– FASTag Issuance
– Digital Payments Support
– Instant Refunds
– Customer Service
– Incorrect Deduction Protection
– Premium FASTag Gold Service
Growing Potential in Telematics
Telematics adoption in India stands at about 40-45%, with projections suggesting it will increase to 65-70% by FY28 due to rising digital adoption. BlackBuck now boasts over 4.2 lakh active telematics devices, with revenue estimates of Rs 87.6 crore for FY25 from hardware and subscription income.
Robust User Retention and Cross-Selling
Focusing exclusively on commercial vehicles has fostered a high-retention user base:
– Three-Year Retention: 66%
– Service Utilization: Over half of users engage with multiple services, spending an average of 43 minutes per day on the app, facilitating effective cross-selling at lower acquisition costs.
The Future of Superloads
BlackBuck is also venturing into its Superloads business—a load-matching platform designed to minimize empty truck trips. Currently active in only four hubs, this initiative has immense scaling potential thanks to BlackBuck’s extensive trucker network. Ambit estimates Superloads could reach $7.8 billion in gross transaction value by FY42, making up about 3% of the projected market, valuing it at Rs 220 of the total Rs 885 target price.
In a bullish scenario, where Superloads captures 8% of the market, the target price could soar to Rs 1,241. For the broader business, Ambit places a value of Rs 665 on BlackBuck based on anticipated profitability improvements and operational leverage, with core payment and telematics businesses projected to grow at a 24% CAGR from FY25 to FY28. Overall, net revenue growth is expected to hit 29%, rising from Rs 426.8 crore in FY25 to Rs 906 crore by FY28.
In conclusion, BlackBuck’s strategic advances in the logistics and transportation sector, underpinned by innovative technology solutions, position it for sustained growth—making it a compelling investment opportunity.